28 April 2021

JC Flowers and Bain Capital Credit have agreed to buy BlueMountain Capital’s share in the Co-op Bank. The acquisition remains subject to regulatory approval.

Nick Slape, Chief Executive Officer of the Co-operative Bank, commented:

“Since we began our turnaround, the backing of our long-term shareholders has enabled us to make significant progress and we are extremely grateful for all the support they have shown. We are delighted to welcome J.C. Flowers & Co and Bain Capital Credit and we are pleased that they share our positive view of the future possibilities for our Bank. This investment builds on the encouraging reception to our £200m debt issuance in November 2020 and is an endorsement of the progress achieved in our five year transformation plan to date, as we anticipate our Bank returning to a position of sustainable profitability from 2021.

Fabio Longo of Bain Capital Credit added,

“We are excited to partner with The Co-operative Bank and support management in their plan for continued growth and value creation. The Co-operative Bank is truly unique in its ethical positioning, which is backed by a loyal customer base. We look forward to supporting this value proposition to existing and future customers.”

You can read the full statement from the bank here [PDF].

Our view

The Customer Union seeks a return of the bank to co-operative ownership, in part if not in whole.

We note that, unlike BlueMountain, JC Flowers and Bain Capital are not generally considered to be hedge funds: both are US private equity funds with a focus on investing in financial services companies. Their different approach is evident in the fact that both funds made public statements on the share purchase. We welcome in particular the comment by Bain Capital on the ban's 'ethical positioning'.

On the less positive side, Bain Capital has recently been involved in the controversial demutualisation of Liverpool Victoria.

Now that the bank has turned a small profit in the first quarter of 2021, this is a sign that that the bank is being seen as a more interesting investment.